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Is MySpace's 15 Minutes Over?

News Corp.'s (NYSE: NWS) MySpace is without a doubt one of the most popular websites on the Internet. With giants like Google (Nasdaq: GOOG) lining up to pay hundreds of millions to be the search engine of choice for the site, it is clear that Mr. Murdoch and Co. got quite the deal when they acquired the site (or did he steal it?) for $580 million last July. Not surprisingly, Mr. Murdoch mentioned at an investor meeting last week that the site now could be sold for $6 billion, and he expects 200 million users by mid-2007.

Murdoch's price-dropping of a potential valuation for MySpace is intriguing, because it implies that News Corp. might be willing to unload the site if the price is right. Given the headaches involved with, say, trying to sell copyrighted music and crack down on its user base, who quite often use illegal means to obtain songs to play on their MySpace pages, it might be a smart move. Heck, the site even gave away a band's MySpace page to a Fox TV show, before an outcry made the company give it back to the band. After all, the younger user base is largely fickle, with sites like Friendster.com and Xanga.com left in its wake.

Advertisers can be fickle as well, and with Facebook.com looking for a billion-dollar-plus valuation, an acquirer needs to have a compelling value proposition for advertisers to justify those types of numbers. Facebook and MySpace, for all their gaudy traffic numbers, are having a difficult time developing a strong advertising base, due in part to fear of user backlash, and in part to the lack of tools to pull data advertisers want from the collective user profiles. Indeed, with some teens moving over to Facebook due to privacy concerns, perhaps Microsoft (Nasdaq: MSFT) , in signing the site to a search deal, didn't do too badly in what many saw as a desperate reaction to Google locking up MySpace.

Still, perhaps with a more web-savvy partner like Yahoo! (Nasdaq: YHOO) or Barry Diller's Interactive (Nasdaq: IACI) , MySpace may be able to reap better synergies across the many Internet properties both own. Those companies will be free of the difficulties that come with potentially devaluing their own valuable TV content for Web shorts, and will be able to view the content landscape from an independent viewpoint. Perhaps it is no surprise that News Corp.'s Internet division president, Ross Levinsohn, who convinced the company to buy MySpace, resigned last week. Investors expecting great things from MySpace for News Corp. might want to reconsider -- MySpace's 15 minutes of fame might be drawing to a close.

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MySpace and the like reach that point where problems, such as those you mention as well as user safty issues, will taint the platform. This issue of child safety on these sites is in the news today because of the Harvard report on the matter. MySpace were one of the contributors and 'wholey agreed' with the reports findings. That would be that it is 'expensive' to implement safety issues. My problem with theses ites is that their very existance is based on huge volumes so they can do these deals for "hundreds of millions to be the search engine of choice".

Any safety and verification tools would reduce numbers and therefore the potential ad revenues. New sites such a http://www.dolphinsecure.com, that provides a 'walled garden' environment for 7 - 18 year olds, which includes social networking platforms that have more functionality than MySpace and provide peace of mind for parents, could edge out the free, ad-driven sites in the coming years, or at least give them a very bloody nose.